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Norwich Union welcomes healthcare report's findings

Article date: 28 January 2002

Responding to the Interim Wanless Report, Norwich UnionHealthcare has welcomed a valuable contribution to the debate ontaking a long-term view of health care funding.

However, in a response compiled by NERA (National EconomicResearch Associates), Norwich Union Healthcare has questionedwhether continuing with a tax-based system of financing will infact become a burden that limits the effectiveness of the NationalHealth Service. In addition, there are significant issues about howsustainable a tax funded system is over the next 20 years given theexpenditure implications of the drivers identified by Wanless.

One of the UK's leading health care insurers, Norwich UnionHealthcare, believes that financing and choice are closely linkedand contribute to patient satisfaction.

Commenting on the report, Edward Bramley-Harker of NERA, said:"While tax financing might be an efficient form of collectingrevenue and controlling costs it may not be the mechanism that bestdelivers the transparency and flexibility demanded by thepatient.

"Evidence suggests that individuals like the greater choiceoffered by other health systems. Countries that have socialinsurance tend to be those with low rates of dissatisfaction, whilecentralised, tax-funded systems have higher levels ofdissatisfaction."

Norwich Union Healthcare believes that there is a need toincrease transparency, to strengthen accountability and placeresponsibility for funding choices closer to the individual.

"We believe that the NHS will not be able to develop theresponsiveness necessary to adapt to the changing needs of thepatients - customers like choice", commented Tim Baker, commercialdirector of Norwich Union Healthcare.

To support this claim the company highlights the health systemsin Spain, the Netherlands and Germany, all of which have elementsof choice and consistently deliver higher satisfaction ratings thanthe NHS.

Another area highlighted by the Wanless Report is the need toencourage individuals to take greater personal responsibility fortheir own health care. Baker points out that choice would motivatethe NHS to meet the needs of patients as well as encouragingimproved efficiency.

The Wanless report highlights employers' reluctance to take onthe burden of social insurance. However, Norwich Union Healthcaresuggest that premiums could be levied on employees rather thanemployers.

A new model of health care provision for the UK, involvingpartnership between the public and private sectors, was put to theGovernment last year. 'Stakeholder Healthcare' was devised by NERAand makes optimum use of the existing and unique advantages of theNHS.

Under Stakeholder Healthcare the NHS would act as an insurer,competing with private health insurers to provide a standardpackage of services. Individuals would pay the insurer of theirchoice a premium based on community rating – i.e. a premiumunrelated to their health risk. Income tax rates would reduce toreflect this. An independent body would oversee the funding of thesystem and distribute resources to the NHS and other stakeholderinsurers.

Baker’s concluding comments focus on the widely heldbelief that people are willing to spend more on their health care,but that current funding arrangements make this expensive andunattractive.

"A health service needs to be responsive to the needs, wants andexpectations of patients. The NHS has traditionally never beenquick to respond to the needs of patients and consequently asignificant gap has opened between what patients want and what theyget. We believe that higher taxes alone cannot close that gap.

"We believe our proposals are a powerful mechanism forencouraging improvements on quality and service delivery, personalaccountability, efficiency and responsiveness. Within the suggestedframework the incentives for individuals to spend more on theirhealth care are clearer and stronger and hence the likelihood ofsignificantly raising overall health expenditure is increased.

"Transparency, choice and responsibility represent a far morepromising way forward. We believe these can be achieved within anequitable and efficient framework.

"We must ask ourselves - can the NHS in its current form reallyadapt to meet the growing pressures forecast over the next 20years.”

National Economic Research Associates (NERA) is aninternational economic consulting firm founded in 1961 to provideclients with practical research and analysis of economic andfinancial issues arising in public policy, regulation, litigationand management. In the health sector, NERA has worked acrossEurope for governments, policy makers and private sector clients,providing advice on all aspects of health sector financing andreform. NERA employs some 300 professional economists in officesin the United States and in London, Madrid, Sydney andBrussels.

Norwich Union Healthcare is the healthcare arm of NorwichUnion and provides a range of private medical insurance, incomeprotection and cash plan products to around 750,000 customers. Itis one of the largest providers of income protection and privatemedical insurance in the UK.

Norwich Union is the UK's largest insurer offering acomprehensive range of long-term savings and general insuranceproducts.

Member of the General Insurance Standards Councilwww.gisc.co.uk

Norwich Union’s news releases are available on thisinternet site

A selection of images is available from the CGNU Newscast siteat www.newscast.co.uk

An ISDN facility is available for studio quality interviews.Call the press office on 08703 66 68 68

Journalists wishing for copies of the Towards StakeholderHealthcare report should contact David Ross at the Norwich UnionPress Office - 08703 66 68 65